Gernot Wagner | Gristhttps://grist.org
A planet that doesn’t burn, a future that doesn’t suckThu, 22 Feb 2018 05:12:36 +0000enhourly1http://wordpress.com/https://secure.gravatar.com/blavatar/330e84b0272aae748d059cd70e3f8f8d?s=96&d=https%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pngGernot Wagner | Gristhttps://grist.org
Naomi Klein is half right: Distorted markets are the real problemhttps://grist.org/climate-change/naomi-klein-is-half-right-distorted-markets-are-the-real-problem/
Wed, 14 Mar 2012 20:31:03 +0000http://grist.org/?p=87349Naomi Klein’s interview in Grist this week is smart, insightful, and half right. Her assessment of the obstacles to solving climate change — from ideology to misplaced faith in green consumerism — are exactly right. And she’s right that fixing this problem means changing how the world does business.

But Klein is wrong in her more serious assertion, first articulated in her “Capitalism vs. the Climate” article in The Nation, that we can save the planet only if we abandon capitalism:

Responding to climate change requires that we break every rule in the free-market playbook and that we do so with great urgency.

The deeper problem is not that our markets are too free; it’s that they are woefully rigged in favor of pollution. Which is also the main reason the Earth finds itself in peril. (I’m pretty sure Klein would agree with that point.)

Think of it this way: As the system is set up now, my 1-year-old son has less right to grow up breathing clean air than to get his driver’s license and join the polluting masses 15 years hence. The reason is simply that markets are constructed so that few have to pay for the pollution they produce.

Every time I open my fridge, turn on the heat, hop in a car (or on a train), or do much of anything, someone else incurs the costs for the pollution my actions produce.

When I fly from New York to Austria to see my parents, my flight produces about one ton of carbon dioxide emissions. That ton causes at least $20 worth of damage to the atmosphere. But I don’t pay a penny of that. Every one of the planet’s 7 billion inhabitants pays a tiny fraction of a penny for my seeing my parents.

Klein offers two solutions. The first calls for a radical rethinking of how we lead our lives, opting for a more leisurely path. A lovely thought. I’d much rather spend weeks at a time visiting my parents in Vienna and in-laws in Bangkok (and take leisurely boat rides to get there) than embark on multiple, jetlag-producing “vacations.”

So yes, let’s create a culture where it’s OK for everyone to take off a couple months in the summer, and perhaps another one around the winter holidays. It works for the Swedes, why not the rest of us?

But Klein realizes this sort of cultural change won’t happen overnight and wouldn’t by itself stabilize the climate. Which leads her to call for “taxing the rich and filthy.”

Nice turn of phrase, but, unfortunately, it confuses the issue. It’s really about taxing the filthy. It’s not about taxing anyone for the sake of sticking it to the man. It’s about asking everyone to pay for their own pollution instead of shoving those costs onto society.

I’d gladly pay the $20 extra for my flight to see my parents. But Klein argues, correctly, that nothing will be accomplished if the only people paying are do-gooders who want to feel better about their carbon footprint. If we want to affect the planet, everyone has to pay the cost of their pollution. Only then will we truly level the playing field.

That all seems like wishful thinking, but it can be achieved. The European Union, starting Jan. 1 of this year, put a carbon price on every flight to and from the E.U.

The program is starting modestly; my flight to see my parents might cost around $2 extra, not the $20 or more that would make up for my pollution. Still, it’s a start. And keep in mind that the E.U.’s system covers a third of all miles flown globally. That’s no longer a bunch of greens spending extra on their organically sourced lettuce. That’s change on a scale the planet notices.

Europe, of course, is not alone. California will soon have the world’s most comprehensive cap-and-trade system limiting global-warming pollution. Australia just passed a carbon price. British Columbia has had one in place since 2008. India has a coal tax. China is pursuing carbon trading as part of its 12th five-year plan. It seems only Washington is falling further and further behind.

All of these are the kinds of changes that work with, not against, market forces and human desires — desires that capture the imagination of billions and make many of us want to buy the latest iAnything or fly on that Airbus 380.

My real argument with Klein is that in trying to escape capitalism, she is trying to evade human nature. We could and should work to make human desires less material. Some of the world’s rich may well be in a sufficiently comfortable position to be able to lead lives in sheltered solitude on their organic farms upstate, but I’m afraid that’s a losing proposition for the globe. (Just look at the density of iPads at any environmentalists’ gathering to know that limiting your own desires isn’t quite as easy as talking about others doing the same.)

It’s not about a full-scale assault on human desires, capitalism, and free markets. That’s another agenda and another debate. It’s about freeing markets, and in the process freeing all of us to do the right thing. It doesn’t get more ethical than that.

Nothing like some good, old-fashioned back-and-forth to keep bloggers — and blog readers? — engaged. EDF is organizing a video/graphics competition to ask for help in explaining, “What is a carbon cap and how will it cure our oil addiction?”

Joe Romm critiqued the competition, calling it “bizarre” to ask others to help us “explain something that isn’t true.” I responded that MIT’s climate model supports us, which prompted another response titled “Happy thoughts and fairy dust: EDF’s and MIT’s magical thinking on carbon caps and oil.”

Phew, still here? Well, reading between the wizard pictures, Joe (can I call you Joe?) makes some good points. I just attended the latest MIT Global Change Forum. MIT modelers are the first ones to admit shortcomings in their own models. Chatham house rules prevent me from disclosing who has said what, but suffice it to say that, Joe, you made a good point about highlighting the biofuels assumptions in the MIT model. In the end, estimating “technological progress” in these academic models is one huge guessing game.

Many of these assumptions rely on expert opinions. That’s a good start, but clearly imperfect. (How many experts predicted mobile phones 20 years ago? How many predicted that the Segway would revolutionize transport?)

Still, if anything, many of these assumptions about technologies are conservative estimates. The simple reason is that no one can predict as of yet undiscovered technologies. If they could, they wouldn’t be in the prediction business, but they would be busy filing patents. Let entrepreneurs loose, and they find solutions to the darndest things. Cherry Chocolate Diet Dr. Pepper anyone?

Government clearly needs to set the rules to guide markets in the right direction (internalize externalities in wonk-speak), but markets fund innovation. That’s where cap-and-trade comes in: Government and science set the target; markets race to find the best way to achieve it. That’s a pretty good division of labor in my book.

And it’s worked for both environmental policies and for prizes for a long time. The British Parliament passed an Act way back in 1714 to pay the princely sum of ₤20,000 for a method that could determine longitude within 30 nautical miles on the high sea. No one predicted that the solution would have been a better chronometer that would also help jump-start the watch industry.

Back to the question at hand: Will a cap cure our oil addiction? It won’t do so immediately. Nothing will. But it will help us make large strides towards that goal in the long run. Should we have additional measures? Sure. California looks pretty good right now with its energy efficiency program that has helped keep electricity consumption flat since the 1970s, while the rest of the U.S. has gulped up more and more energy. Green or greener transit and infrastructure investments can’t hurt. And many other measures can help our necessary transition to a green collar economy.

Yet none of this will be enough without a clear set of rules to guide market-driven innovation and reward the most creative solutions with the big prize. In the real world, it’ll be a piece of the $5 trillion a year energy sector. In this case, it’s $10,000 for a smart way to explain how cap-and-trade works.

Romm calls it a “bizarre” contest “to explain something that isn’t true,” since “it is all but inconceivable that a carbon cap will solve our oil addiction.” Well, not so fast.

A cap alone will not cure all ills, but it goes a long way toward solving the problem. Let’s look at the numbers.

MIT’s analysis of the Climate Security Act using their EPPA model says that net crude oil imports would be 22 percent lower by 2015 under CSA than without. These savings rise to 31 percent by 2020, 41 percent by 2025, and 66 percent by 2030. (Savings decrease in the next years due to some modeling assumptions around other countries taking on caps, but are up to 62 percent again by 2050.) Sure, that’s technically not “solving the problem” entirely. However, solving two thirds of it isn’t all that bad in my book.

But that’s not all. Rising prices alone aren’t going to solve the transport issue: 97 percent of our vehicles run on oil. Changing that requires more than increasing the price, as examples from Europe and many economic studies show. That’s where additional direct mandates like higher CAFE standards come in, much like as Romm suggests.

It’s also where the cap can show its full potential. Depending on how many of the carbon allowances are auctioned (as opposed to given away for free), a cap will also generate large sums of money. Part of that could be used to jump-start our transition to a greener transportation sector that’s less dependent on fossil fuels. It’s tough to put a number on this. Yet it wouldn’t be too surprising if a combination of these measures could take care of the remaining third of the problem.

These arguments also show why the ad competition is a good idea. It’s tough to translate economic modeling results into an accessible language without sounding overly wonkish, let alone describing the potentials for these additional measures.